The European Broadcasting Union (EBU), which represents pubcasters, has come down in favor after some uncertainty, arguing that the proposal on broadcasters’ Internet transmissions and retransmissions will enable more Public service media (PSM) content to circulate online without damaging rights holders’ business models. Given that cable and satellite pay TV or broadcast services already allow cross border access so that subscribers can watch their subscribed content wherever they are, it made sense to extend the same rules to online services, according to the EBU’s Head of European Affairs Nicola Frank. “The fact that the same current affairs programme or European-made fiction can be watched in several EU countries via satellite and cable TV but not on the Internet is an anachronism,” said Frank. “The European Commission has made a proposal to change this.”

The EBU was presenting its viewpoint on the European Commission’s proposal during a November 30 hearing in the European Parliament organised by the European Conservatives and Reformists (ECR) Group. However, the Association of Commercial Television in Europe (ACT), which represents leading commercial broadcasters and international channel groups, took the opposite view, contending that the proposals undermined the financial model of content production.

ACT opposed the fundamental proposal to extend the country of origin principle to online content, because making content readily available via the Internet across borders would remove incentives to invest in local programming in some of the smaller countries especially. The country of origin principle holds that when goods or services are delivered across borders the transactions are governed by the laws of the source country.

ACT drew a subtle distinction between rights holders which, it argued, the EU had missed in drawing up the draft regulation. For rights holders, such as broadcasters when they are merely distributors, the legislation makes some sense because they can gain European-wide rights, for catch-up TV for example, more easily by applying in just one country. But it could deprive content owners of revenue on a per country basis. The market for content in smaller countries would be diminished because it would be assumed consumers there would access content via a service in a neighboring country.

ACT said that on top of undermining the ability of rights-holders to license on a territory-specific basis, the proposals would by the same token reduce investment in content. ACT estimated total losses of €9.3 billion a year in the short term, settling down at €4.5 billion a year in the longer term, as a result of less European content being produced as well as less accessible, affordable content being generally available.

ACT’s arguments appear to have been taken from a report released earlier in 2016 at the Cannes Film Festival in France by a group of Hollywood studios and various service providers. This 99-page study, conducted in response to the EU’s Digital Single Market strategy announced a year before that in May 2015, found strongly against cross-border access. The problem was that, “if buyers believe that the audience will have already seen the content on other services, such as international VoD providers, or the original broadcaster’s catch-up service, they will be unwilling to invest or will substantially reduce any investment.” The study then added that, “consumers will switch their premium film pay TV to cheaper services abroad offering much of the same content, again draining revenues from the industry.” The result would be uncertainty over future revenues, which would weaken established funding mechanisms such as output deals, co-production agreements and pre-sale agreements, the report said.

Yet the EBU, after careful consideration, has rejected the tenet of that report and therefore ACT’s arguments. “The EBU would not support the Commission’s proposal if it considered that it undermines territoriality and contractual freedom,” said Frank. “These principles, which are fundamental for Europe’s audiovisual sector, are clearly asserted in the draft legislation itself,” she added.

That draft regulation is based on the licensing model for satellite and cable TV, which has been in place over 20 years without, according to the EBU, preventing rights holders and broadcasters from controlling exploitation of a programme on an exclusive territorial basis if desired. Frank noted that there are around 1500 unencrypted free-to-air satellite channels and 3000 cable TV channels available around Europe.

The arguments then revolve around the extent to which online distribution changes the game by making it so much easier to access content anywhere at any time. The EBU argues that the game had already changed with catch up services available via legacy channels and so that it makes sense now to create legal clarity by extending the same rules to all forms of distribution. The EBU says that by applying a single licensing framework based on the broadcaster’s country-of-origin to online transmissions in the EU, the model proposed by the Commission would enable cross-border availability of certain online content. “The approach would significantly strengthen legal certainty and the efficiency of licensing for broadcasters’ online operations and ultimately support the free flow of information in Europe,” it argues.

It looks like the objections will be either overcome or ignored as the tide flows towards universal licensing.